Earn, burn, repeat: The power of 'Earn and Burn' loyalty programs

Earn, burn, repeat: The power of 'Earn and Burn' loyalty programs

This customer retention approach prioritizes simplicity, flexibility & relevance.

Earn, burn, repeat

Mumbai: In an ever-evolving digital world, driving customer loyalty is crucial for business success. One effective strategy is the "earn and burn" loyalty program. This simple yet effective approach rewards customers with loyalty points for each purchase they make, which they can then redeem for exclusive rewards, discounts, and other perks.

Also known as point-based transactional programs, Earn and Burn encourages repeat business by offering tangible benefits for customer engagement. From supermarkets and hotels to e-commerce and fitness centers, various industries have adopted this model to enhance customer retention, gather valuable data, and gain a competitive edge.

To know more about this loyalty program, Indiantelevision.com has gained insights from some of the visionaries on:

1   How has the concept of ‘Earn and Burn’ loyalty programs evolved and its difference from other loyalty program models such as tiered membership or cashback rewards?

2   How has technology played a role in facilitating the earn and burn process today compared to earlier implementations?

3   What challenges has your company faced in implementing and managing earn and burn programs, and how have they addressed these challenges?

Thriwe co-founder and chief strategy officer Swati Sharma

There has been a distinct change in the traditional 'Earn and Burn' loyalty program models, and today it offers more innovative benefits. Initially, these programs only awarded points for purchases. Today, they also reward actions like followings on social media and writing reviews, which fosters significant engagement.

These programs promote quicker point redemption, benefiting businesses. Earn and Burn programs are simpler than tiered memberships that offer increased rewards based on spending levels - such as silver, gold, and platinum tiers. They emphasise personalisation, repeat visits, and quick point redemption with various options tailored to different demographics and regions, rather than cashback programs that merely return a percentage of spending with limited reward options.

In short, the focus of Earn and Burn programs has shifted from merely earning points to enhancing engagement and incorporating gamification.

Technology has transformed the 'Earn and Burn' programs. Purchases and activities are now tracked through digital transactions and apps, granting points instantly. Customers can even earn rewards for social media followings and reviews! With data, one can tailor promotions and rewards to the consumer preferences, and mobile apps make redeeming points easy. This transformation makes the entire process faster, smoother, and more personalised.

I can tell you that implementing an ‘Earn and Burn’ program is an exciting act. The rewards must be appealing enough to drive point accumulation, but not so luxurious or exclusive that they go unused. Detailed customer data is crucial for optimizing the program and is required to be collected from the start. Simplicity is significant because a complicated program could be off-putting. Advanced security is also necessary to protect against hackers. By offering lucrative rewards, implementing clear communication, data analysis, and advanced security, an Earn and Burn program can be mutually beneficial for both the customers and the merchants.

Tagglabs founder Hariom Seth

The earn-and-burn loyalty program is the one with the little barrier to entry. This is one of the oldest loyalty programs that has existed. Initially, this was simple with customers receiving points for their purchases which could be later redeemed for a discount. Now it is not just used in retail but by airlines, and hotels and are customised to suit each sector. With the advent of data analytics loyalty programs have become extremely sophisticated. In the case of earn and burn this reward system is being made more interactive and easier to redeem using data analytics. This loyalty program is deepening the company's customer relationship by individualising the reward system and making it more customer-centric.

Earlier, spending money to earn points and to redeem them only once a threshold of points was achieved leading to low customer engagement. Also, in the age of instant gratification, this loyalty program was considered slow since the customers had to wait for a certain number of points to accumulate for them to redeem. Currently, data analytics, gamification, and AI is being used in various loyalty programs. This enables the creation of ecosystems for the customer where they can track and redeem their loyalty points across various platforms.

POP founder Bhargav Errangi

In a recent dive into my own Gmail, I uncovered a fascinating world of loyalty programs—38 to be exact. As a loyalty practitioner, I pondered on the dynamics that make these programs truly impactful.

Surprisingly, despite a cumulative value of Rs 15K (and a potential unicorn status if we include CRED), the majority of these programs struggle to capture my attention. Why? The answer, in my humble opinion, lies in the challenge of redemption restrictions.

Most programs tie redemption to their own brand, necessitating an intricate dance across 35 different brands for over 50 transactions worth Rs. 2.82Lacs(Hope my better half is seeing this ?) to maximize the value. A daunting task, to say the least! The true gems in my loyalty journey? Programs offering freedom to redeem across multiple brands.

In this clutter of loyalty initiatives, I found myself an active participant in only three programs: my credit card provider, an airline, and a major e-commerce player—each sharing the common thread of flexible redemption options.

The heart of the matter? Customers engage with what resonates and provides real value. The overload of transactions and the cognitive load of managing multiple programs are genuine hurdles. The lesson here is clear: simplicity, flexibility, and relevance are the cornerstones of a successful loyalty program.

As a customer, I crave programs that align with my preferences and respect my bandwidth. Albert Einstein might have excelled at complex theories, but in the loyalty landscape, simplicity reigns supreme.

At POP, we are not trying to keep things simple, be it the way customers earn and burn coins or the value comprehension of the program. Customers when shopping don't have time or mental bandwidth to look for loyalty points, hence it's important to ingest the program at various touchpoints so customers can easily understand the value of the program before they have made the buying decision. This is what can create impact rather than programs that integrate the redemption only once the customer has reached the checkout, where the decision to buy is already made and the delta in impact is much less.

The journey of POP has been nothing less than a steep climb as not only are we battling the solutions from incumbents but also the bias that brands for their own currency rather than an ecosystem one. But we have been able to create strong inroads going brand by brand convincing them on the model and have been able to gather support from 150 brands including likes of Mcaffience, Myfitness, Adil Qadri, Bacca Bucci, Anveshan, Two Brothers Organic Farm, Powergummies, epigamia, etc.